For several years now, Democrats in the state of California have enjoyed all the perks of one-party rule. With supermajorities in the state assembly, they don’t have to deal with an opposition party. They certainly don’t need to provide any kind of transparency to the public. They’re completely free to enact the Democratic Party’s grand vision — just like the leaders of notorious utopias like Baltimore, Selma, Detroit, or Oakland. If states are the laboratories of democracy, then California is the laboratory of the Democratic Party. Whatever Democrats want, they get.
That’s why hundreds of thousands of people flee California every year and it’s why a lot more are about to leave the state. California, without much discussion or debate, just raised its minimum wage for certain fast-food workers to $20 an hour. This is a 25% wage hike, up from $16 an hour. The law applies to chains with 60 or more locations in California, including franchises — many of which are family-owned.
The totally foreseeable and inevitable followed, and a bunch of fast-food chains announced mass layoffs. Others started raising prices, and at least one restaurant so far has closed down completely. Watch:
Those employees at Foster’s Freeze went from $16 an hour to zero dollars an hour, thanks to the minimum wage hike which California declared a “win for workers.” And they’re not alone.
When this law was signed, two large Pizza Hut franchisees laid off more than 1,200 delivery drivers. In San Jose, The Wall Street Journal reports that two small Vitality Bowls restaurants have cut their workforce in half. Restaurants like Jack in the Box are “testing fryer robots and automated drink dispensers” so they can fire more employees soon. Hours are being cut and of course, prices are going up too, across the board.
The New York Post reported, at one Los Angeles-area Burger King, prices for a Texas Double Whopper went from $15.09 on March 29 to $16.89 on April 1, once the law went into effect. That’s an increase of nearly $2 for the same exact — already horrifically overpriced — food in just two days. The Big Fish meal went up by $4, from $7.49 to $11.49. That’s the precise increase in hourly wage, passed directly onto customers. Several other menu items went up “anywhere from 25 cents to a dollar,” the Post found.
From what I’ve seen, some of the advocates of the minimum wage hike on social media have tried to dismiss the concerns over the price hikes by saying that 25 cents to a dollar isn’t a very steep increase. But what they’re ignoring is that, first of all, as a percentage of the overall price of the item, these hikes are already significant. And second, this law has been in effect for less than two days and this is what has happened only in that time frame. We can assume that prices will continue to go up.
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One of the many fast-food companies raising prices is the fried chicken restaurant Raising Cane’s. The CEO of the company went on CNBC recently to talk about the impact of this legislation on his business.
Now, based on everything you’ve just read, you might assume that the CNBC anchor conducting the interview would have a dim view of this new legislation. After all, you’d expect someone at a business-oriented network to understand that higher prices and fewer jobs are generally a bad thing. But here’s how she frames her question:
The CEO doesn’t really answer the question, probably because he’s there for a nice PR opportunity and he doesn’t get adversarial or maybe he wasn’t paying attention. But it’s an incredible question to ask in earnest, which she appears to be doing. If you give minimum wage workers a raise, but in the process make it more expensive for them to live and eat, you have not really given them a raise. You haven’t made it easier for them to purchase more chicken fingers.
This is especially the case for the many workers who have already lost their jobs because of it, and the many more who will in the near future.
The fact that this is apparently difficult to say out loud — even for the CEO of Raising Cane’s — tells us a lot about how California got in this position. Very few people in the state seem to understand basic principles of economics — or at least, they don’t want to talk about them. But the fast food workers themselves understand what’s going on here. They realize that they didn’t actually get a raise.
Here’s an employee from Jack in the Box explaining a basic economic reality that the governor of her state doesn’t seem to comprehend:
How does a fast-food worker understand the economics of this situation better than the CNBC anchors? Why is she raising issues that California politicians don’t seem to understand? Whatever the answer is, this is getting to be a running theme in California.
A couple of years ago, California sent out millions of “inflation relief checks,” which accomplished nothing except making inflation even worse. But there was no opposition party that could block those checks, just like there’s no opposition party to block this minimum wage increase.
In fact, in California, the labor unions obtained nondisclosure agreements during the negotiations for the minimum wage bill. So no one can talk about how exactly this bill came about. There’s never going to be a full explanation for why Gavin Newsom’s friend and donor at Panera Bread managed to secure an exemption for fast-food restaurants that make bread, for example. (Not that we really need an explanation for that. It’s the kind of naked corruption that one-party states are well known for).
But you don’t need an insider’s look into the legislative process to know how poorly conceived this law is. That’s because, after the bill was passed, legislators went back and added a bunch of other exemptions, including fast-food locations in airports and stadiums. That’s how you know you’re dealing with a very well-thought-out law — the legislators just go back and redo it a few weeks later. These are the people manipulating the economy in the most populated state in the country. They’re doing it as haphazardly as you’d expect.
The truth is that raising the minimum wage (by 25%, which is obviously a very sizable hike) in the midst of inflation and a struggling economy is incredibly stupid. There’s really no other word for it. It attempts an end-run around the actual problems facing Californians. Except, really, it’s worse than that. They aren’t just avoiding the problems, but actively making everything worse. They’re trying to solve problems by creating more of the problems they’re allegedly trying to solve. And they aren’t done.
In fact, some leaders in California think that $20 an hour is still too low. It’s not even half of what they think the minimum should be. Here’s Rep. Barbara Lee:
Just do the math. Do the math, says the woman who apparently can’t add two plus two. She wants to mandate six-figure incomes for the people who run the cash register at McDonald’s. You notice that she was asked about the economic sustainability of such a plan and did not pretend to even address that concern. That’s because it is, of course, not sustainable at all. $20 an hour isn’t even sustainable. $20 an hour has already caused a bloodbath of layoffs and price hikes. $50 an hour would simply be the end of commerce in California, which means the end of California itself. So, on second thought, maybe her plan has some benefits.
But you notice what Lee said in that clip. She said that a family of four needs a six-figure income just to get by. That’s not really true — you can get by on less, my family did at one time — but think about how that applies here. She’s saying that minimum wage workers need a massive, mandatory raise because that’s what’s necessary for families of four to survive. This obviously implies that there are a lot of single-income households of four where the breadwinner makes minimum wage. But that’s not generally the case, and this is really, perhaps, the most important point here. Minimum wage jobs are not meant to be careers. These are supposed to be jobs for teenagers working part-time while they finish high school. These aren’t jobs that grown adults with kids and mortgages are supposed to be doing for years on end. So if you’ve been working at a job for five or ten years and you still make minimum wage, there’s obviously a serious problem — and it’s not one a minimum wage hike can solve.
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Personally, I want every minimum wage worker to get a hefty raise. But that can be achieved, and should be achieved, by earning a raise. It can also be achieved by getting some work experience under your belt and then finding a better job somewhere else. Minimum wage is supposed to be a stepping stone. Not a foundation to build your life on.
It’s a bit like if lawmakers passed a law declaring that all tent manufacturers must make their tents big enough and sturdy enough that they can be lived in for six months at a time. But that’s not what tents are supposed to be used for. That’s not what a tent is. A tent is something you stay in for a few days at a time. Now, lawmakers in California might respond, “No that’s not true. In our state lots of people live in tents for years. They set them up right on the sidewalk!” Yes, but the problem there is not that the tents are insufficient homes. The problem is that those people are trying to turn tents into homes. The problem is with how the tent is being used. Minimum wage is like the tent of salaries. It’s meant to be very temporary.
The advantage of working a minimum wage job is that the bar is pretty low. Show up on time, look presentable, put in the effort, be reliable, be moderately competent, cover all the basics, and you’ll be on the fast track to a better job — either at your current place of work or somewhere else. You don’t need to wait around for the government to force your employer to give you a raise.
As I’ve said plenty of times before, the best way for a minimum wage worker to make more money is to not be a minimum wage worker anymore. That’s a basic truth that you won’t hear from politicians like Barbara Lee. Instead they’ll promise you the pie in the sky. The bad news is that they probably won’t deliver on that promise.
The worse news is that they might. And then everyone’s problems will get much worse.
